Thursday, July 30, 2009

Primerica increases Metlife's Variable Annuities sales

This portion of the news report was taken from Reuters titled, "Metlife Posts $1.4 bln quarterly net loss":

MetLife said its annuities business saw a 43 percent increase in deposits in the quarter, stemming from a record $4.5 billion in variable annuity deposits.

Life insurers are seeing increased demand for annuities as Americans begin to deploy cash more actively into retirement investments.

Variable annuities are much like mutual fund investments, except they include features such as a guaranteed stream of retirement income.

But MetLife's strong balance sheet is helping it stand out against rivals.

"MetLife, unlike some of the other companies, is benefiting from a 'flight to quality,'" said Morningstar's Rambaldini.

Unlike half a dozen of its peers, MetLife never asked to be included in TARP, a federal funding program originally intended for banks, instead tapping capital markets when it needed to bolster capital.

The company's net worth, or the book value of its equity, rose about 18 percent in the quarter to roughly $25 billion.

While the report don't say why or how Metlife's Variable Annuities business is growing, a regional sales manager from Metlife said Primerica sells more variable annuities than Metlife's sales force. Its no shock to me. Primerica has the largest securities licensed representatives in North America. I believe Metlife's Prime Elite variable annuities is the best kind of variable annuity out there with its low fees and guaranteed features associated with it such as guaranteed growth for several years and access to hundreds of mutual funds.

I have sold a few variable annuities by either doing a 1035 exchange with a cash value life insurance policy or a 1035 exchange with a variable annuity. My parents once owned a variable universal life insurance policy. One policy with $30,000 coverage had about $8,000 in net surrender cash value and the other policy with $100,000 coverage had $15,000 in net surrender value. Their total annual premium for a total of $130,000 coverage was $2400. Both of them bought this life insurance policy when they were 40 years old.

At the time I sat down with my parents (both at age 56), I found out they were under-insured, meaning they didn't have enough coverage to cover their financial needs. I gave each of them a 20 year term with $100,000 coverage each for a total of $200,000 coverage. They had health issues and rated "non-tobacco" instead of "preferred", so their annual premium is $1621/year. If they bought the 20 year term when they were 40 years old (they were healthy back then), it would of cost them $299/year, saving them $2101/year. If they invested the difference for a period of 16 years (from age 40 to 56), they would of have about $87,000 in their account at a 10% rate of return. In their variable universal life policies, they only had about $23,000. That's almost a $64,000 difference!

After the term policy was issued, I did a 1035 exchange with their variable universal life policies and moved the cash value into a variable annuity. My parent's original retirement plan was relying on social security and government programs, if they even qualify for government assistance. I did not want my parents to retire poor and downgrade their life style. Besides opening variable annuities for them, I also open a Roth IRA for both of them. They both plan to retire at age 64, so they only had another 12 years to invest. Both of them invest $300/month into their own Roth IRA (a total of $600/month) and with a 8% return (because they are conservative investors), each of them would have about $72,600 in their retirement account for a total of $145,200. $145k is not alot of money to retire on, but at least its something. Plus, they don't pay any taxes on this and all withdrawals are tax-free because that's how a Roth IRA works.

Anyway, so their new retirement plan now includes social security, income for life from their Metlife's variable annuities, and their Roth IRA and from me who is currently earning over $90,000/year and soon to earn over $100k/year with no stop in sight. This is why I love Primerica. Helping families, building a business, having freedom, and being able to support your loved ones with no worries about money. Everyone who is in Primerica has the same opportunity, but it requires hard work, small sacrifices, and focus to achieve these goals.


RHerrera-GATitans said...

Fantastic Blog!
Marietta, GA

buyapension said...

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NWA Warriors said...

If you could go back and correct the horrible grammar in this post, it might be something we could use to send our to prospective VA clients.